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UNIVERSITI TUN HUSSEIN ONN MALAYSIA

FINAL EXAMINATION
SEMESTER I
SESSION 2021/2022

COURSE NAME : ENGINEERING ECONOMY

COURSE CODE : BFC 44602 / BPK 30902

PROGRAMME CODE : BFF

EXAMINATION DATE : JANUARY / FEBRUARY 2022

DURATION : 2 HOURS

` INSTRUCTION : 1. ANSWER ALL QUESTIONS.

2. THIS FINAL EXAMINATION IS AN

ONLINE ASSESSMENT AND
CONDUCTED VIA CLOSE BOOK.

THIS QUESTION PAPER CONSISTS OF SEVEN (7) PAGES

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Q1 (a) You are a resident engineer for a building construction project. One of your tasks is
to participate in a joint-inspection for concreting activity. During the post-concrete
inspection, you noticed that there was a water seepage in the first floor concrete
slab, as shown in Figure Q1. Using general steps for the decision making process,
propose the best solution to solve the problem.
(10 marks)

(b) MNM Century Sdn Bhd is a building contractor in Johor who just won the tender to
construct 20 units of low-mid-cost house in Pontian, Johor. Both client and
contractor agreed that the term for payment is based on the unit completed. For each
unit completed, the contractor will be paid one-off payment worth RM 100,000. The
contractor have to choose whether to use the traditional method or innovative IBS
system in order to maximize their profit. The details for both construction methods
are shown in Table 1.

Table 1
Innovative IBS
Description Traditional Method
System
Total construction duration 24 months 12 months

Working days/week 6 days 5 days

Cost Factors
Fixed cost RM 200,000 RM250,000

Site staff salary (total, monthly) RM20,000 RM25,000

Labour cost (Average, daily) RM80 x 5 pax RM120 x 5 pax

M&E labour cost (per unit) RM2,000 RM2,000

Material cost per unit RM 30,000 RM 20,000

(i) Demonstrate the best method between the two options from economic
perspective?
(8 marks)

(ii) Based on your answer in Q1(b)(i), calculate the minimum number of houses
need to be sold before the company start gaining profit.
(4 marks)

(iii) Illustrate the breakeven graph for the selected method that include the
breakeven point, total revenue, total cost and fixed cost.
(3 marks)

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Q2 (a) Since the country was hit by the Covid-19 pandemic last year, almost all sectors
have been affected including construction. Therefore, in 2021 the prices of
construction materials have increased by 30% and continue to be expected high in
demand of up to 40-50% for next years. Table 2a shows raw data of materials’ over
the three respective year. As a construction supplier, your company have to estimate
the three types of construction materials. The weight placed on aggregate is three
times compared with other materials in the market.

Table 2a
Price (RM/tonne) in year
No
Type of materials on site
2019 2020 2021

1 Bar reinforcement 235 290 380

2 Sand 89 102 110

3 Aggregate 67 88 80

(i) Calculate a weighted index for the price of materials (per tonne) in 2021,
when 2019 is the reference year having an index value of 92.
(2 marks)

(ii) If Index in 2022 were estimated to be double from Index in 2021, analyze
the price of each material at the year 2022, based on I2021.
(7 marks)

(iii) In your opinion, predict TWO (2) possible implications if the price of
materials keep increasing.
(4 marks)

(b) A new factory needs a preliminary cost estimation using factor technique for capital
expenditure for 3,000 square meters of lands, five units of warehouse, three cool
rooms and a loading facility. Including to the risk assessment, the additional percent
will be include in the unit’s factors about 5-10% from each cost of capital
expenditure.

Additional to that, estimating cost for working capital as to run the factory for 6-18
month are also needed as shown in Table 2b. Contingency expenses 10% from the
total working capital estimated should also be included.

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Table 2b
Details cost of capital expenditure Cost (RM)
Lands RM120/m2
Warehouse RM30,000/unit
Cool Room RM15,000/unit
Loading Facility RM9,000/unit
Details cost of working capital
Raw Material RM25,000/month
Labor Wages RM8,000/month
Utilities Expenses RM1,800/month
Administration Salary RM3,000/month

(i) Prepare an appropriate table to demonstrate all capital expenditure required

for the project.
(5 marks)

(ii) Prepare an appropriate table to demonstrate all working capital required for
the project.
(7 marks)

Q3 Ramesh works at a construction company. He made a loan for a Chase Bank credit card that
carried at a nominal rate of 14.24% per annum, or 1.187% per month. He loans a total of
RM1000 and plans to start pay at the end of the first month. However Ramesh failed to do
the payment as schedule for the first month. Therefore, the total due to be paid increased to
RM1041.87.

(a) If this situation continues for a total of 12 months, determine the total due after 12
months and the effective annual rate of interest Ramesh has accumulated. Remember,
the fine print on the card’s interest and fee information states a penalty nominal rate
of 30% per year after one late payment of the minimum payment amount, plus a late
payment fee of RM39 per occurrence. For detail the interest and fees, show the
figures in an appropriate table.
(17 marks)

(b) What amount should he ask to be transferred by the due date each month if there
were no penalty nominal rate and no late payment fee.
(3 marks)

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(c) Justify if the effective annual interest rate would be charged for this year based on
the answer in Q3 (a).
(5 marks)

Q4 (a) The state government of Pahang is planning to build a new concrete dam for
hydroelectric facility in Jerantut district. Besides generating power, the dam which
equipped with flood control system also be built for tourism attraction. The
government already identified 2 potential, locations, A or B. The estimated benefits
and costs for both locations under consideration are shown in Table 3. The interest
rate for 20 years and 40 years life span are 5% and 7% respectively.

Table 3: Estimated costs and benefits

Cost and Benefit (RM Location
million) A B
Initial cost 180 210
Operational and maintenance
1.1 1.5
costs per year
Power sales per year 2 1.0
Environmental impact per year 1.5 2.3
Recreation benefits per year 2.5 3.1
Irrigation benefits per year 3.2 4.1
Flood control per year 1.5 1.2

(i) Determine the cost, benefit and disbenefit for 20 and 40 years of project life
span using present worth (PW) method.
(12 marks)

(ii) Justify the most suitable location based on the benefit-cost analysis.
(4 marks)

(b) The Department of Works is proposing a new road construction and maintenance
for Kampung Kota Dalam, Parit Raja, Batu Pahat, Johor. A new road will allow
access to the new development area that previously could only be reached with off-
road vehicles. The cost of rural road construction is expected to be RM600,000. The
road will require annually maintenance work cost of RM30,000. The improved
accessibility will led to a 200% increase in the property values along the road.
Examine whether the project should be proceeded or not by determining the
conventional B/C ratio with PW using an interest of 5% per year if the previous
market value of a property was RM500,000. Consider (10 + x) year of study period
in your analysis, x is the last digit of your matric number.
(9 marks)
 END OF QUESTIONS 

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FINAL EXAMINATION
SEMESTER/SESSION : SEM I 2021/2022 PROGRAMME CODE : BFF
COURSE NAME : ENGINEERING ECONOMY COURSE CODE : BFC 44602 / BPK 30902

FIGURE Q1

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FINAL EXAMINATION
SEMESTER/SESSION : SEM I 2021/2022 PROGRAMME CODE : BFF
COURSE NAME : ENGINEERING ECONOMY COURSE CODE : BFC 44602 / BPK 30902

LIST OF FORMULA
1. p (1 + i) n
2. Cn= Ck (In/Ik)
3. Zu = K(un)
4. n = log s / log2
W1 (Cn1/Ck2) + W2 (Cn2/Ck2) + W… (Cn…./Ck…)
I
5. n = --------------------------------------------------------------- X Ik
W1 + W2 + W…….
6. Conventional B-C ratio with PW
B-C = PW(B) ÷ [(I – PW(MV)) + PW(O&M)]
7. Modified B-C ratio with PW
B-C = [PW(B) – PW(O&M)] ÷ [ I – PW(MV)]
8. Conventional B-C ratio with AW
B-C = AW(B) ÷ [CR + AW(O&M)]
9. Modified B-C ratio with AW
B-C = [AW(B) – AW(O&M)] ÷ CR

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